We all know someone who’s just terrible with money, right? They’re always broke, constantly complaining about their financial woes, but never seem to change their habits.

The thing is, these people often don’t even realize the mistakes they’re making. They’re stuck in a cycle of bad financial habits that just keep digging them deeper into debt.

In fact, there are seven common habits that people who are bad with money tend to share. And they usually have no idea they’re doing it.

Today, we’re going to shine a light on these financial faux pas. Because recognizing the problem is the first step towards fixing it. And who knows? A little bit of insight could set you on the path to better money management.

So, let’s dive in and take a look at the seven habits you need to avoid if you want to keep your finances in check.

1) Living for today

We all know someone who lives by the motto, “You can’t take it with you.” And while it’s true that life is for living, it’s also important to plan for the future.

People who are bad with money often fall into the trap of spending everything they earn. They’re always up for a night out, they have the latest gadgets, and they never think twice about splashing out on a fancy meal.

They’re living for today, without considering tomorrow.

But here’s the thing: you never know what’s around the corner. An unexpected expense could hit at any time. And without a safety net, these people find themselves in financial hot water.

Smart money management isn’t about denying yourself all of life’s pleasures. It’s about finding a balance between enjoying the present and preparing for the future. And that’s a concept that people who are terrible with money just don’t seem to grasp.

2) Ignoring the small stuff

I have a friend who’s always on top of the big financial decisions. He’ll haggle for hours to get a good deal on a new car or a house. But when it comes to the small stuff, he just doesn’t pay attention.

You see, he’s the kind of guy who will spend $5 every day on a fancy coffee without giving it a second thought. He’ll pay for convenience, like eating out instead of cooking at home, or taking a taxi instead of the bus. He never thinks about how these small expenses add up over time.

I tried explaining to him once that if he saved that $5 every day, he could have an extra $1,825 at the end of the year. But he just shrugged and said, “It’s only $5.”

That’s a classic example of a bad money habit. People who are terrible with money often ignore the small stuff, not realizing that these seemingly insignificant expenses can have a major impact on their finances in the long run.

3) Relying on credit

People who are terrible with money often rely heavily on credit. Instead of saving up for a big purchase, they’ll put it on a credit card or take out a loan.

This over-reliance on credit can lead to a vicious cycle of debt that’s hard to escape from. And the thing is, carrying a balance on your credit card can cost you a lot more than you might think.

Consider this: if you have a $1,000 balance on a credit card with an annual interest rate of 18%, and you only make the minimum payment each month, it would take you over seven years to pay off the balance.

And you would end up paying more than $700 in interest!

That’s money that could have been put to much better use. But people who are bad with money often don’t think about the long-term cost of their decisions. They just see the immediate benefit of getting what they want now, without considering the financial consequences down the line.

4) Neglecting to save

Having a savings account isn’t just about putting money aside for a rainy day. It’s about cultivating a mindset of financial discipline and long-term planning.

People who are bad with money often neglect to save. They might think they don’t earn enough to put anything aside, or they might believe that they can start saving “later”.

But the truth is, there’s never a perfect time to start saving. The best time is always now. And even small amounts can add up over time, thanks to the magic of compound interest.

By neglecting to save, these individuals are not just missing out on the chance to build a financial cushion. They’re also missing out on the opportunity to build wealth over time and secure a more comfortable future.

5) Not setting a budget

I’ll admit it, I used to be one of those people who never set a budget. I thought it was too restrictive, that it wouldn’t allow me to enjoy my money. But boy, was I wrong.

After a couple of years living paycheck to paycheck, I realized something had to change. That’s when I started budgeting.

Let me tell you, it was a game-changer. Instead of constantly worrying about whether I had enough money for my bills, I knew exactly where every dollar was going. And instead of feeling restrictive, it was actually freeing.

People who are bad with money often resist the idea of setting a budget. They see it as a limitation rather than a tool. But in reality, a budget is one of the most effective ways to take control of your finances and stop the cycle of bad money habits.

6) Falling for impulse buys

We’ve all been there. You’re standing in line at the grocery store, and you see a chocolate bar or a magazine that you just have to have. Before you know it, it’s in your basket and you’re heading to the checkout.

Impulse buying is a common habit among people who are bad with money. They see something they want, and they buy it without thinking about whether they can afford it or even if they really need it.

This kind of spontaneous spending can be particularly damaging to your finances if it happens often. It’s easy to dismiss each individual purchase as being small and insignificant, but over time, these impulse buys can add up and take a significant toll on your budget.

Learning to resist the temptation of impulse buys is an essential step towards better money management.

7) Avoiding financial education

Perhaps the most damaging habit of all is avoiding financial education. People who are bad with money often don’t understand the basics of personal finance.

They might not know how interest rates work, or the difference between a credit card and a debit card.

But here’s the thing: financial literacy is not a luxury, it’s a necessity. Without it, you’re navigating the world of money blindfolded.

Investing some time and effort into learning about personal finance can make a world of difference. It can help you avoid costly mistakes, make smarter decisions, and ultimately take control of your financial future.

The final word: It’s all about awareness

At the heart of this exploration of bad money habits is a fundamental truth: awareness is the first step towards change.

And that’s where the power of knowledge comes in. By gaining a deeper understanding of these common pitfalls, we can start to identify them in our own behavior. We can recognize when we’re falling into these traps and make a conscious effort to steer clear.

It’s not about overnight transformation or suddenly becoming a financial whiz. It’s about making small, consistent changes that can gradually steer us away from these detrimental habits and towards a healthier relationship with money.

As Benjamin Franklin once said, “Beware of little expenses. A small leak will sink a great ship.” It’s time to patch those leaks and set sail for a future of financial stability.